Alvin is the sole shareholder of an S corporation that earned $200,000 in 2016 and distributed $75,000 to Alvin.Alvin must recognize $75,000 as income from the S corporation in 2016.

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Alvin must recognize the entire $200,000 of the S corporation's earnings as income, not just the $75,000 distributed to him. S corporation shareholders are taxed on their share of the corporation's income, regardless of distributions.

Alvin Is the Sole Shareholder of an S Corporation That